Five for less: how does Kogan beat Apple’s iPhone 5 price?

When Apple announced its flagship iPhone 5 last week, Australian e-tailer Kogan was one of the first to make pre-orders available, even beating Apple itself. Not only that, but Kogan managed to beat the pricing by a hundred bucks per tier, so how can they do it?

With the iPhone 5 launching on September 21, quite a few people are all ready to ditch their current smartphone and snatch up the next generation of Apple handset, with a 4 inch IPS screen, new aluminium and glass design, and support for the 4G LTE networks currently on offer by Telstra and Optus.

Apple’s flagship handset for the next year, the iPhone 5 will cost $799, $899, and $999 from Apple Australia for the 16GB, 32GB, and 64GB versions respectively.

But Kogan is charging one hundred dollars less for each model, with $699, $799, and $899 for the 16GB, 32GB, and 64GB versions.

How is this possible?

“The iPhone 5 on sale at Kogan’s website is a grey import product,” said Fred Schebesta, director of Finder.com.au, a service run to help Australians compare credit cards, home loans, and mobile phone pricing. “Exchange rates, shipping rates and accessories have allowed Kogan to make a profit from the iPhone 5.”

Currently, iPhone 5 stock for Kogan comes from Hong Kong, similar to the iPad stock Kogan started offering last year, allowing Kogan to purchase them from Apple in Hong Kong at prices close to what the e-tailer is charging in Australia.

The profit Kogan makes is relatively small – as low as nine dollars, in fact – but customers can also spend on iPhone accessories at the store, potentially making more money for Kogan at the time.

Warranties, according to Mr. Schebesta, are a little more complicated, with the Apple warranty running through Apple Hong Kong, and thereby possibly requiring the individual to head overseas to claim it.

We reached out to Apple last year about this and were told by a spokesperson for the company that the local Australian warranty applies “to the hardware product manufactured by or for Apple that can be identified by the ‘Apple’ trademark, trade name, or logo affixed to it,” which would include any official hardware whether purchased from Apple in the US or Hong Kong.

“[Grey importing] is a legal process that can save Australians loads of money, but it has its drawbacks too,” said Mr. Schebesta. “One is that you’ll have to pay separately for shipping, a cost that will set you back $19 AUD, meaning your net saving will still be $81 AUD overall compared to buying direct from Apple.”

We’re checking with Apple directly to see if anything has changed regarding its warranties and grey imports, but as always, it’s a case of buyer beware, so make sure to read up on how it all works and ask the retailer and e-tailer any questions before you put down the money in the end.